Differences between Capital and Revenue Receipts:

Differences between Capital and Revenue Receipts

To know the Difference Between capital and revenue receipts we have to know the meaning of both terms. and To know the meaning of Capital and Revenue Receipts, first of all, we have to know the meaning of the Receipts. Receipts meaning the amount received or will be received from operational and non-operational activities of the business. These can be paid in cash or credit or in kind. These are divided into two types on the base of time. Explained as following: –

Meaning of Capital Receipts: –

Capital Receipts are that amount which is received from non-operational activities i.e. Bank Loan, Debenture etc. In other words, the amount received from other then capital and operation for the explanation of business or for the running of the business are known as capital Receipts.

In short, we will drive the benefit from these Receipts in the current year as well as in the future year also.

Example: – 

Taking a loan from the bank and issuing debenture to the public. 

Meaning of Revenue Revenue: –

Revenue Receipts are that amount which is received/earned from operational activities i.e. Sale of goods and services. In other words, the amount received from other then Non-operation for the running of the business is known as Revenue Receipts.

Example: – 

  • Amount earned from the sale of goods and services
  • Discount received
  • Refund of taxed received
  • Rent received from Building
  • Sale of scrap
  • Commission Received
  • Income from other Source, etc.

Chart of Difference Between capital and revenue receipts: –

Basis of Difference

Capital Receipts

Revenue Receipts

Meaning

Capital Receipts are that amount which is received from non-operational activities i.e. Bank Loan, Debenture etc Revenue Receipts are that amount which is received/earned from operational activities i.e. Sale of goods and services.

Year of Benefit

we will drive the benefit from these Receipts in the current year as well as in the future year also we will drive the benefit from these Receipts in the current year only

Repayment

It has to repay after fixed maturity or in instalments.  It has not to repay.

Financial Statement 

It will be posted in the Balance sheet. It will be posted in the Trading and Profit/Loss account.

Capitalized 

These Receipts will be capitalized. These Receipts will not be capitalized.

Nature

It is non-recurring in nature. It is recurring in nature.

Need 

To improve the working capacity or to grow the business To running the existing business capacity properly.

Matching Concepts

These are not matched with the capital Expenditure These are matched with the revenue receipts to know the profit/loss for the year.

Sub Categories

It has no subcategories. It has two subcategories.
  1. Direct Income
  2. Indirect Income

Download the chart: –

If you want to download the chart please download the following image and PDF file:-

Chart of Difference Between capital and revenue receipts 287x300 - Differences between Capital and Revenue Receipts:
Chart of Difference Between capital and revenue receipts
application pdf - Differences between Capital and Revenue Receipts:
Chart of Difference between capital and revenue Receipts

 

The conclusion of Difference: –

The main difference in both types of Receipts is the repayment terms. The business has to repay capital receipts and has not to repay the revenue receipts. 

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T.S. Grewals Double Entry Book Keeping - Differences between Capital and Revenue Receipts:

T.S. Grewal’s Double Entry Book Keeping

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